Patron eyes co-investment strategy with Tour Eiffel

London-based real estate private equity group Patron Capital Partners is looking to co-invest in France together with Societe de la Tour Eiffel after acquiring a minority stake in the Paris-listed firm.

'We have a significant amount of cash which we can co-invest with Tour Eiffel and we see their platform as an excellent way to invest in France,’ Keith Breslauer, managing director of Patron, told PropertyEU.

The company recently entered into exclusive negotiations with Société de la Tour Eiffel about a share-property swap. Under the proposed deal, Société de la Tour Eiffel will offer Patron shares totalling 8.4% of its share capital in exchange for a 20,000 m2 office complex on the fringes of Paris.

The 20,000 m2 asset, located in the Malakoff district of the French capital, is currently let to corporate voucher distributor Edenred on a lease with eight years to run. The proposed deal would generate an initial return of 7.2%.

The share exchange values the property at €28.4 mln after debt is taken into account. The deal will see some 568,000 shares in Tour Eiffel issued at €50 each.

‘We were actively looking for new investments in France but the question was how to compete with the public market which has a cheaper cost of capital,' Breslauer commented. 'So we decided it would make sense for us to work in partnership with Tour Eiffel. We know the management quite well and we agree with their market strategy for Tour Eiffel.’

Société de la Tour Eiffel is listed on NYSE Euronext Paris. The company’s portfolio of offices and business space is spread evenly between the Paris area and the regions and is valued at €915 mln.

Patron Capital manages €2.5 bn of capital across several funds with offices in London, Luxembourg, Barcelona, Milan, and Dreieich (Germany).